Students' economic outlook on the mark

Undergraduates from Sacred Heart University work on predicting state's fiscal future

Linda Conner Lambeck
| on June 5, 2015

FAIRFIELD -- A group of undergraduate business students from Sacred Heart University could have predicted another Connecticut tax hike might trigger threats of departure by corporate giants like General Electric or Aetna.

Their spot-on economic outlook, presented last month as part of a final project entitled Connecticut Economic Outlook for 2015-2017, suggested that tax policies in the Nutmeg State appear to be failing and are discouraging growth of the financial sector in particular and business in general.

"Policymakers need to address these under-performing components of the GDP (Gross Domestic Product) if we wish to track well with national growth," stated the report, which looked not only at the state budget, but the housing market, financial sector, labor market development, structural changes to the economy and the real Connecticut economy.

Lucjan T. Orlowski, a professor of economics at Sacred Heart and director of the doctoral program at the university's Jack Welch College of Business, said the class serves both to sharpen students' business skills and develop their citizenry.

"I want to make them engaged citizens so we do a comprehensive forecast on the economy of Connecticut," he said.

Orlowski suspects the report wouldn't have been much different if it were delivered this past week.

"(The report) was critical about the extensive tax burden," he said. "I agree with GE or Aetna criticizing the additional taxes on corporations. They should not take place."

The report has been done twice before by previous economic and financial forecasting classes, but this one takes a more pessimistic view of the state economy, particularly in relationship to the nation.

Connecticut residents are not seeing the same kind of recovery that is happening elsewhere.

On the unemployment front, Connecticut's rate of 6.3 percent unemployment is above the national average of 5.5 percent and places the state 42nd in overall unemployment rankings. The report noted that Connecticut has lost 12,000 and 45,000 jobs in the financial and manufacturing sectors, respectively, since the recession began.

In housing, the students found that prices for homes in Connecticut are close to double the national averages for comparable properties, and tax rates are prohibitively high compared with other states. They found that home ownership has dropped to 67.4 percent in 2014 from 70.5 percent in 2009, while rental vacancy rates have steadily declined.

John Brownell, one of the students who worked on the forecast, said the semester-long assignment helped support the predisposition he had on the Connecticut economy.

"The data shows the struggle Connecticut has had to recover from the economic recession," said Brownell, of Glastonbury. "The state has been unable to keep pace with employment recovery rates of other states and its rankings depict this struggle."

He said the consensus of the report is that state policies and tax proposals are not helping the situation.

"The administration seems to be flirting with policies that could cost the state many jobs and work contrary to its goal of strengthening the middle class," Brownell said.

In all, 16 students worked on various sections of the report, which is published online and which has been shared with lawmakers, various city officials and economic development directors.

The outlook, Orlowski added, was not all doom and gloom. It found that the private sector, particularly educational services, has been one of the few growing markets in the state. Additionally, the students reported that many of the new jobs are in low-skill, low-pay areas, indicating that while numbers show improvement, income and tax revenue growth will not increase significantly.